CoinDesk
New York Attorney General Letitia James secured a settlement requiring former Celsius CEO Alex Mashinsky to pay up to $35 million and permanently barring him from the securities, commodities and cryptocurrency industries. Mashinsky is serving a 12-year federal prison sentence after pleading guilty to securities and commodities fraud.
Why it matters
The settlement resolves New York’s civil case, filed in 2023, over claims that Mashinsky misled hundreds of thousands of investors about the safety of Celsius deposits, including more than 26,000 New Yorkers. James said Celsius promoted itself as safer than a bank while using customer assets in risky strategies and concealing losses.
The payment terms are conditional. Mashinsky must pay New York $25 million if he does not forfeit $10 million in ill-gotten gains to the federal government. He must pay a further $10 million if he fails to serve his full prison sentence. The CFTC had also permanently barred him from commodities activity in June.
Market impact
Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month. Customers and creditors have received more than $3.4 billion through the bankruptcy proceedings, according to James. Celsius had planned to distribute roughly $3 billion in crypto and cash when it emerged from bankruptcy in 2024, using Coinbase and PayPal for payments.
The settlement adds a permanent state-level industry bar to the federal prison sentence and CFTC action. For investors, the case also keeps the risks around Celsius’s customer-asset practices and the long process of recovering funds in view.
Frequently asked questions
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What does New York’s settlement bar Alex Mashinsky from doing?
It permanently bars him from working in the securities, commodities and cryptocurrency industries.
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How is the settlement’s payment of up to $35 million structured?
Mashinsky must pay New York $25 million if he does not forfeit $10 million in ill-gotten gains to the federal government, plus $10 million if he fails to serve his full prison sentence.
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What was New York’s civil case against Mashinsky about?
The 2023 suit alleged he misled hundreds of thousands of investors about the safety of Celsius deposits, including more than 26,000 New Yorkers.
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How much have Celsius customers and creditors received?
They have received more than $3.4 billion through Celsius bankruptcy proceedings, according to Attorney General Letitia James.
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What happened to Celsius before it entered bankruptcy?
Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month.
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